The Optimal Investment Purchase
Looking for your first investment or looking to increase your portfolio? Not sure what you’re looking for? At Savoy Real Estate, our experience and market knowledge gives us an insight into what potential tenants look for and what properties are the most attractive to those looking to rent. The below information is an opinion piece based on the experience of Savoy Real Estate property management staff and is not based on specific statistics.
The optimal number of bedrooms to target when buying an investment property is all dependent on the area you are buying in. For example, in an area dominated by apartments and one to two bedroom homes it’s advisable to go for the higher number of bedrooms. A tenant looking for a one bedroom home could be interested in a two bedroom home simply for the extra space, while a tenant looking for a two bedroom home is highly unlikely to settle for only one bedroom, there’s a reason they need the extra space provided by a second bedroom. People are more likely to reach for more than settle for less.
In properties with more than one bedroom, two bathrooms is always the optimal choice. For families, it’s basically a must-have, for two single adults renting a two bedroom apartment, it’s a must and for those who have experienced the benefit of an ensuite before, it’s a must. Being such an essential part of a home, more bathrooms is always a plus and a positive advertising point for any investment.
Further, better quality bathrooms are always going to attract more interest. There’s no point having two bathrooms if one basically looks like an outhouse!
Another point with bathrooms, particularly for families with younger children, is the presence of a bath. You might think “we have a bath in our place and no-one ever uses it”, but you’d be surprised about the number of tenants who will not apply for a property simply because it doesn’t have a bath.
For properties that have three or more bedrooms, two living spaces that are separate from each other is optimal. A common comment from families viewing rental properties is “There’s enough bedrooms and bathrooms, the kitchen is great, but with these kids we simply need a second living area.” Imagine a family of five; two parents and three children sharing one living area… Not a fun time for anyone. With two living areas you’re much more likely to attract a family stable unit as a tenant.
The kitchen is often the decider for many tenants when they are thinking of applying for a property. Positives for a kitchen to have are:
- Plenty bench space
- Plenty cupboard space
- Large meals area
- Large or unrestricted fridge space
- Ability to plumb a fridge in
- Large or walk-in pantry
- Electric oven
- Gas stove top
A run down kitchen with limited bench space, no dishwasher, no pantry, a limited fridge space and electric stove top is going to reduce the price you can advertise for and limit the amount of applications from potential tenants.
The layout of the property is very important to certain classes of tenants. Families in particular like the bedrooms to be able to be partitioned off from living areas, prefer toilets separate to bathrooms and dining areas with hard floors or tiles. While single professional adults who may be sharing prefer bedrooms to be located away from each other and bathrooms away from bedrooms. Professional singles or professional couples prefer compact and easily maintainable properties that have reasonable living spaces or undercover deckings for entertaining. Tenants who work in trades may require garage or shed space for storage.
Think about who your market is. Is the area you are purchasing a professionally dominated area, trade dominated area or a family dominated area? Make your decision based on your target market.
The area you buy your investment is can heavily impact the quality of tenant, return on investment and leasing potential of the property.
Properties that are located within walking distance of shops, public transport and schools are always highly sought after by a range of tenants, while properties in lifestyle suburbs (E.g. Albert Park, Prahran) target a niche tenant type who specifically seek to live in those suburbs.
When it comes to schools, catchment zones for highly sought after schools are worth researching. Those properties located within catchment zones can be so highly sought after that the price potential can be significantly higher than similar properties in the same area but outside the catchment.
It’s worth viewing the median rents for the suburbs or towns you are looking at purchasing in and comparing this to the cost of purchasing the property. While in some areas the return on investment for rental purposes may seem low due to the high purchase price, but take into account that these areas often yield high increases in sale value. Often in areas where the rent provides a high return on investment, the sales value increases at a much slower rate.
The above information really just gives a short insight into some ideas and points to look for when purchasing the optimal investment property and are simply based on feedback from potential tenants we’ve dealt with all over Melbourne. But there is so much more!
If you’ve got a property in mind and want our opinion or assistance, give us a call! Even if the property isn’t listed with Savoy. There’s no obligation as we’re always here to help in any way we can, 1300 328 848.
* The above information is general in nature and may not apply to your situation. The above information is in accordance with the current legislation as at the 19th of July, 2018.